What’s been happening?

Pound Sterling – UK Markets 

The British pound recovered a small portion of its recent losses against the buck on Friday and continued to weaken vs the euro as Brexit uncertainty continues to force investors to stay on the sidelines. British Prime Minister Theresa May’s spokesman announced that Stephen Barclay got appointed as the new Brexit Secretary. However, the spokesman also explained that PM May would take charge of Brexit talks by stripping the Brexit department of that role and Brexit Secretary was to stay focused on the domestic preparedness and getting the Brexit legislation through the Parliament.

Speaking to CNBC on Friday, former British Brexit Secretary Davis argued that PM May’s Brexit deal with the EU would be rejected by the Parliament saying that it would remove all the benefits of Brexit. ”Nobody prefers a no deal, it is not something to be terrified of. We can renegotiate for a free trade deal in four months,” Davis added. On the other hand, Irish Foreign Minister Simon Coveney stated that it looked like they were “heading towards a no deal Brexit.”

Following their meeting on Friday, the European Union (EU) Ambassadors announced that there will be a special EU27 Brexit meeting starting on Sunday. Markets expect the EU27 to announce a statement on Monday, in which they could also confirm the date for the Brexit summit on November 25. 

US Dollar – US Markets

The greenback came under a heavy selling pressure in the second half of the day on Friday amid some cautious remarks from Fed officials. In an interview with CNBC, Federal Reserve's new Vice Chairman Richard Clarida said that although further rate adjustments were appropriate, there was evidence of a global economic slowdown and the Fed needed to factor that in its policy outlook. Similarly, Dallas Fed President Kaplan warned over the global outlook and its potential negative impact on the U.S. economy and added that debt to GDP ratio had become a tailwind.

The data published by the Board of Governors of the Federal Reserve System showed that industrial production in the U.S. edged up 0.1% in October to fall short of the market expectation for a 0.2% growth. “Hurricanes lowered the level of industrial production in both September and October, but their effects appear to be less than 0.1 percent per month,” the publication read. “At 109.1 percent of its 2012 average, total industrial production was 4.1 percent higher in October than it was a year earlier. Capacity utilization for the industrial sector was 78.4 percent, a rate that is 1.4 percentage points below its long-run (1972–2017) average.”

 Euro – European Markets

The data published by the Eurostat on Friday showed that the inflation in the euro area as measured by the Consumer Price Index (CPI) on a monthly basis rose 0.2% in October to keep the annual rate unchanged at 2.2% for the same period. The core CPI, which excludes volatile food and energy prices, increased 1.1% annually to match analysts’ estimate. 

While delivering his keynote speech at the European Banking Congress in Frankfurt. European Central Bank (ECB) President Mario Draghi said that the recent slowdown had raised questions about the strength of the economy. “If conditions should tighten or if inflation outlook deteriorates, it would be reflected in an adjustment in the expected path of future interest rates,” Draghi added and concluded by saying that the ECB intended to end net asset purchases subject to data. In the meantime, European Commission vice president Valdis Dombrovkis told Il Sole that Italy was openly defying EU budget rules.

What’s coming up? 

UK: The Rightmove House Price Index will be the only data featured in the UK economic docket on Monday.

US: San Francisco Fed President Williams is scheduled to deliver a speech on Monday. There won’t be any macroeconomic data releases from the U.S.       

EU: The European Central Bank will announce the current account data and publish the EU Financial Stability Review. Additionally, Germany’s Bundesbank will release its monthly budget report.